Tesla is approaching a very critical spot. There are several key technicals that all speak in favour of it having topped out in January. If that's the case it automatically means that whatever we're seeing right now is the height of its distribution phase prior to rolling over for some serious price damage.
Let's go through those technical clues, one by one.
1) We have a textbook primary 5-wave impulse.
A normal 2nd-wave correction is a steep price correction. In Tesla's case, we saw a retracement to the 786 fib - one that found support on it with uncanny precision. Equally so, a normal 4th-wave correction is a complex time-based correction - one that typically materialises in the shape of a triangle. According to these standard rules, Tesla abides to both.
2) Whenever you draw a fibonacci retracement from the bottom of a 5-wave impulse and to the end of the 5th-wave, the bottom of the 4th-wave correction statistically aligns with the 618. And so, too, it does here. Naturally, this further speaks in favour of Tesla having topped out for this primary and secular market cycle, as in for a long time to follow.
3) The RSI is our by far best tool in determining whenever a mark-up shifts into a distribution. What happens is that the RSI goes from consistently high levels - often overbought such - to swiftly retrace down towards the green neutral 50-line, upon which it then fails to break above the upper bearish blue line (see the red cirle on the chart). This is a pivot at which the RSI and price suffer syncronised "max pain" and is equally so THE ideal spot to open short positions.
4) The price is currently nearing in on the golden 618 ratio. This is where I will begin to ladder in shorts. Yet, if the price were to slip too far into the zone, I'll release it and re-enter again at the 786.
But here's the thing. IF Tesla were to break above this critical zone I will consider laddering in leveraged longs. And there are two prime reasons for that.
1) The long RSI divergence (the dotted red line) is typical 3rd-wave behaviour. This is more standard than not. By that token, it would mean that the current triangular-looking price development in fact is the real primary 4th wave, upon which we can expect a final price pump to the north.
2) A price pump above the red danger zone would mean that the weekly RSI would break the upper bearish blue line, and hence disqualify it entirely.
In this sense, as long as Tesla stays within or below the red danger zone a short play is the predominantly correct move from a statistical point of view. This is likely to result in a high risk-to-reward short spot - one in which we can utilise high leverage due to the low risk.
If, on the other hand, Tesla were to break above this zone, the probabilities swiftly shift from very bearish to very bullish.
Let's go through those technical clues, one by one.
1) We have a textbook primary 5-wave impulse.
A normal 2nd-wave correction is a steep price correction. In Tesla's case, we saw a retracement to the 786 fib - one that found support on it with uncanny precision. Equally so, a normal 4th-wave correction is a complex time-based correction - one that typically materialises in the shape of a triangle. According to these standard rules, Tesla abides to both.
2) Whenever you draw a fibonacci retracement from the bottom of a 5-wave impulse and to the end of the 5th-wave, the bottom of the 4th-wave correction statistically aligns with the 618. And so, too, it does here. Naturally, this further speaks in favour of Tesla having topped out for this primary and secular market cycle, as in for a long time to follow.
3) The RSI is our by far best tool in determining whenever a mark-up shifts into a distribution. What happens is that the RSI goes from consistently high levels - often overbought such - to swiftly retrace down towards the green neutral 50-line, upon which it then fails to break above the upper bearish blue line (see the red cirle on the chart). This is a pivot at which the RSI and price suffer syncronised "max pain" and is equally so THE ideal spot to open short positions.
4) The price is currently nearing in on the golden 618 ratio. This is where I will begin to ladder in shorts. Yet, if the price were to slip too far into the zone, I'll release it and re-enter again at the 786.
But here's the thing. IF Tesla were to break above this critical zone I will consider laddering in leveraged longs. And there are two prime reasons for that.
1) The long RSI divergence (the dotted red line) is typical 3rd-wave behaviour. This is more standard than not. By that token, it would mean that the current triangular-looking price development in fact is the real primary 4th wave, upon which we can expect a final price pump to the north.
2) A price pump above the red danger zone would mean that the weekly RSI would break the upper bearish blue line, and hence disqualify it entirely.
In this sense, as long as Tesla stays within or below the red danger zone a short play is the predominantly correct move from a statistical point of view. This is likely to result in a high risk-to-reward short spot - one in which we can utilise high leverage due to the low risk.
If, on the other hand, Tesla were to break above this zone, the probabilities swiftly shift from very bearish to very bullish.